ESAF Small Finance Bank gets SEBI nod to float IPO

Kerala-based Evangelical Social Action Forum (ESAF) Small Finance Bank received regulatory nod to float an initial public offering (IPO) of Rs 976 crore. SEBI issued the final observations to the lenders' proposal on March 20, 2020, according to the information published on the capital markets regulator’s website.

According to draft red herring prospectus (DRHP), the IPO comprises of a fresh issue worth Rs 800 crore and an offer for sale (OFS) aggregating up to Rs 176.2 crore.

The net proceeds from the fresh issue will be used to augment the bank's tier 1 capital, primarily loans/advances and investment portfolio, in order to meet the future capital requirements.

ESAF Small Finance Bank currently operates in 16 states and one union territory through its 403 branches and 38 ultra-Small branches, serving over 3.73 million customers.

Microfinance loans account for 95.75 per cent of its total gross advances and its loan book outside Kerala has grown from Rs 5,490 million in March 2017 to Rs 25,402.45 million as on September 30, 2019, which is 48.46 per cent of the total microfinance loan book size. The total gross advance as on September 30, 2019, stood at Rs 54,742.35 million.

The bank's net profit increased from Rs 240.60 million in September 2018 to Rs 924.40 million in September 2019 and the interest earned increased from Rs 4,722.58 million in September 2018 to Rs 6,606.83 million in September 2019. As on date, the bank stands to have the highest share of retail deposits as a percentage to the total deposits, when compared to the other small finance banks.